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Chapter 18: Q30E (page 1016)

Blue Ridge Mountain Manufacturing had the following transactions related to manufacturing overhead for the year:

1. Incurred manufacturing overhead costs

a. \(5,000 in indirect materials

b. \)12,500 in indirect labor (credit Wages Payable)

c. \(30,600 in machinery depreciation

d. \)20,400 in other indirect costs that were paid in cash

2. Allocated manufacturing overhead (use a compound entry)

a. \(30,000 to the Mixing Department

b. \)37,000 to the Packaging Department

Requirements

1. Prepare the journal entries for Blue Ridge Mountain Manufacturing.

2. Determine the amount of overallocated or underallocated manufacturing overhead by posting the transactions to the Manufacturing Overhead account. Assume the balance in Manufacturing Overhead on January 1 is $0. Prepare the adjusting entry.

Short Answer

Expert verified

1. The journal entries to record the transaction undertaken in Blue Ridge Mountain manufacturing are shown in step 2.

2. The manufacturing overhead is under allocated by the amount of $1,500. The adjusting entry is shown below:

Date

Particulars

Debit ($)

Credit ($)

Cost of goods sold

1,500

Manufacturing overhead

1,500

Step by step solution

01

Step-by-Step Solution:Step 1: Manufacturing Overhead

Manufacturing overhead is the total of all the expenses indirectly incurred by the company for producing the products. It does not include the direct cost.

02

Journal entries to record the transactions

Date

Particulars

Debit ($)

Credit ($)

1.a.

Manufacturing overhead

5,000

Raw material

5,000

1.b.

Manufacturing overhead

12,500

Wages payable

12,500

1.c.

Manufacturing overhead

30,600

Accumulated depreciation

30,600

1.d.

Manufacturing overhead

20,400

Cash

20,400

2.

Work-in-process inventory-Mixing department

30,000

Work-in-process inventory-Packaging department

37,000

Manufacturing overhead

67,000

03

Manufacturing overhead account

Particulars

Amount ($)

Particulars

Amount ($)

Raw material

5,000

Allocated overhead

67,000

Wages payable

12,500

Work-in-process inventory

1,500

Accumulated depreciation

30,600

Cash

20,400

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Most popular questions from this chapter

Question: The Finishing Department of Lee and Lewis, Inc., the last department in the manufacturing process, incurred production costs of \(220,000 during the month of June.If the June 1 balance in Work-in-Process Inventory—Finishing is \)0 and the June 30balance is $70,000, what amount was transferred to Finished Goods Inventory?

Bergeron’s Exteriors produces exterior siding for homes. The Preparation Department begins with wood, which is chopped into small bits. At the end of the process, an adhesive is added. Then the wood/adhesive mixture goes on to the Compression Department, where the wood is compressed into sheets. Conversion costs are added evenly throughout the preparation process. January data for the Preparation Department are as follows:

UNITS

Beginning work-in-process inventory

0 sheets

Started in production

3,900 sheets

Completed and transferred out to compression in January

2,700 sheets

Ending work-in-process inventory (25% of the way through the preparation process)

1,200 sheets

COSTS

Beginning work-in-process inventory

\(0

Costs added during January

Wood

3,120

Adhesive

1,836

Direct labor

990

Manufacturing overhead allocated

2,100

Total costs

\)8,046

Requirements

1. Prepare a production cost report for the Preparation Department for January. The company uses the weighted-average method. (Hint: Each direct material added at a different point in the production process requires its own equivalent unit of production computation.)

2. Prepare the journal entry to record the cost of the sheets completed and

transferred out to the Compression Department.

3. Post the journal entries to the Work-in-Process Inventory—Preparation T-account. What is the ending balance?

Question: Describe the flow of costs through a process costing system.

What are transferred in costs? When do they occur?

Bishop Company uses the FIFO method in its process costing system. The Mixing Department started the month with 500 units in a process that was 20% complete, started in the production of 2,000 units, and transferred 2,100 units to the finished goods storage area. All materials are added at the beginning of the process, and conversion costs occur evenly. The units in process at the end of the month are 45% complete concerning conversion costs. The department incurred the following costs:

Beginning WIP

Added this month

Total

Direct materials

\(500

\)2,000

\(2,500

Conversion cost

1,250

5,450

6,700

Total

\)1,750

\(7,450

\)9,200

14A. How many units are still in process at the end of the month?

15A. Compute the equivalent production units for the Mixing Department for the current month.

16A. Determine the cost per equivalent unit for the current period for direct materials and conversion costs.

17A. Determine the cost to be transferred to the next department.
See all solutions

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